ABSTRACT
The formulation starts with the bookkeeping necessity that money received minus money paid out equals the net change in money holdings. The allocation matrix plus the three equilibrium equations thus state in general terms the condition of macro-financial equilibrium, including one redundant function and one redundant equilibrium equation. Since the allocation matrix for each economic unit is a hypothetical statement of alternative patterns of behavior under alternative sets of conditions, the matrices for separate units are independent and can be summed for the total of all units. The allocation matrix plus the three equilibrium equations thus state in general terms the condition of macro-financial equilibrium, including one redundant function and one redundant equilibrium equation. The general and complete formulation given above contains not only three alternative definitive descriptions of equilibrium but two of these alternatives each involve a partial system of equilibrium which can be solved independently from the other.
